In early September the High Court ruled against provisions of the Industrial Relations Act which allowed workers to gain compensation or reinstatement if the dismissal process itself was harsh or unreasonable, even when the employer had proved that a valid reason existed for the dismissal. Valid reasons for dismissal may be based on the employee's conduct, performance or the operational requirements of the business. The decision is likely considerably to strengthen the position of employers, whatever happens to the government's new Workplace Relations Bill.
The High Court also upheld the federal government's right to make laws dealing with industrial relations under the corporations and external affairs powers of the constitution. So although the High Court finding on unfair dismissals suits the reform agenda of the current government, at a broader level its decision upholds the rationale given by the former Labor government for formulating the industrial relations legislation. Labor also argued that the legislation was necessary to fulfil Australia's international treaty obligations. A future Labor government could therefore try to use the September 1996 ruling as support for any decision to re- regulate the labour market or other aspects of corporate affairs.